Monday, October 21, 2013

The SBA and petard

petard

(pe-TAHRD)

1. A small bomb
used to blast down a gate or wall.

2. A loud
firecracker.

From French péter
(to break wind), from Latin peditum (a breaking wind), from pedere (to break
wind). Ultimately from the Indo-European root pezd- (to break wind) which also
gave us feisty, fart, and French pet (fart).

_______________________________________________

TIP OF THE WEEK

Ignore some of the
petards about wasteful government spending.

The continuing
resolution that will fund the federal government for another 86 days should
include broad based support for the Small Business
Administration.

For the SBA 7(a) program, the return to a zero subsidy
rate removes the need to seek appropriations. It also reduces lender
fees.For its 7(a) guaranty loan program, the SBA budget
authority will support a program level of $17.5
billion!

SBA loans are good
for the economy. Remember, SBA 7(a) loan volume is a leading economic
indicator as the correlation coefficient between SBA 7(a) loan volume and the
economy’s Gross Domestic Product is a statistically significant
0.86.

The debenture rate
is only 3.37% but note rate is 3.425% and the effective yield is
5.451%.

________________________________________________

AHEAD
OF THE YIELD CURVE

Lost
amongst the petards in Washington was the fact that employment growth
is languishing.

The
government shutdown has severely affected employment, or at least the reporting
of it.

The
jobs report from the Bureau of Labor Statistics for the month of September will
finally be released tomorrow. It would have normally come out three weeks ago.

Only 169,000 jobs
were added in August. The government had also revised down its estimated job
growth for June and July by a combined 74,000 jobs, meaning the net gain from
the job’s report is under 100,000 jobs. That does not even keep up with
population growth.

Here is a summary
of net monthly payroll employment and this week’s interesting little table of
data:

August
169,000

July
104,000

June
172,000

May
176,000

April
165,000

March
88,000

February
332,000

January
148,000

2012

December
155,000

November
161,000

October
137,000

September
114,000

August
142,000

July
181,000

June
45,000

May
77,000

April
68,000

March
143,000

February
240,000

January
243,000

2011

December
203,000

November
157,000

October
112,000

September
158,000

August
104,000

July
127,000

June
20,000

May
25,000

April
232,000

March
194,000

February
235,000

January
68,000

2010

December
121,000

November
93,000

October
210,000

September
(41,000)

August
(1,000)

July
(66,000)

June
(175,000)

May
431,000

April
218,000

March
230,000

February
(36,000)

January
(26,000)

2009

December
(150,000)

November
(11,000)

October
(111,000)

September
(215,000)

August
(201,000)

July
(304,000)

June
(443,000)

May
(322,000)

April
(504,000)

March
(699,000)

February
(651,000)

January
(655,000)

2008

December
(681,000)

November
(597,000)

October
(423,000)

September
(403,000)

August
(127,000)

July
(67,000)

June
(100,000)

May
(47,000)

April
(67,000)

March
(88,000)

February-
(83,000)

January-
(76,000)

What does all this
mean?

I don’t
know.

At the current
pace of job growth, it would take more than six years to get back to
pre-recession employment levels. The Federal Reserve’s Federal Open Market
Committee meets next week on monetary policy and they have made it clear that
they won’t even consider raising interest rate until unemployment
improves.

It
would appear that interest rates won’t be going up anytime
soon.

Our
politicians might be hoisted by their own petards
yet.

__________________________________________OFF
BASE

Hoisted
by one’s own petard?

Believe
it or not, Vin Scully once used that phrase in a baseball
game.

On
Cinco de Mayo back in 2008, Dodger pitcher Chad Billingsley struck out
ineffectually, prompting Vinny to state that "he was hoisted on his own
petard"... The Dodgers would go on to win that game 5-1.

So
what does it mean to be hoisted by one’s own
petard?

A
petard was a bell-shaped bomb used to breach a door or a wall. Now that we have
advanced to nuclear missiles, this low-tech word survives in the phrase "to
hoist by one's own petard" meaning "to have one's scheme backfire".

The
idiom was popularized by Shakespeare in his play Hamlet. Hamlet, having turned
the tables on those tasked with killing him, says: